Why I Recommend Numismatic Specialization

When I first started out in the coin business, I assumed I was going to sell everything; Morgan Dollars, Barber Dimes, St. Gaudens double eagles and Charlotte gold, I'd handle it all. But I quickly learned that it would be difficult--and costly--to be an expert in so many areas of the market. I then decided that I'd become really good at just a few things and leave the rest to other people. Nearly three decades later, that's exactly what I've done: I've become a world-class expert in 18th and 19th century U.S. gold. I think my decision to become highly specialized was one of the best things that I've ever done from a career standpoint. And I believe that what I did has practical applications to new and advanced collectors alike.

Becoming a savvy numismatist isn't necessarily a difficult process. But it is an involved one and one that takes a lot of time. If you are like most people, time is one commodity that you do not have an excess of. Given the high value of time in this day and age, I'd suggest that you use the time you spend on numismatics wisely. This is where specialization makes a lot of sense.

I became a specialist in the area of U.S. gold coinage because, as I mentioned above, I realized that the most economically viable approach to numismatics as a career for me was going to be as a specialist. I'd like to share a few thoughts of mine regarding specialization. Its a lot easier to become a competent numismatist who makes good decisions if you are focusing on a narrow range as opposed to a broad range. But I think the concept of specialization is not totally understood. You can be a "broad specialist," a "narrow specialist" or an ultra specialist."

Which one you choose depends on a number of factors including--but not limited to--your budget, your range of interest, availability of coins and opportunity factors. A "broad specialist" is a collector who has a pre-determined focus but not necessarily a constrained one. Let's say, as an example, that you really like crusty original gold coins made prior to the Civil War and have a budget of up to $5,000 per coin. This means that you might purchase coins as diverse as an 1858-S gold dollar in AU58 or an 1846-D half eagle in VF35. Your focus isn't so much a specific series or type as it is a "look." In other words, your collection is focused on attractive, dirty coins. You might not know the relative rarity of an 1858-S gold dollar in AU58 but you know the "look."

A "narrow specialist" is more focused on coins from a specific mint or of a specific denomination. He might buy an 1858-S gold dollar because he is putting together a set of gold dollars or, even more specifically, a subset of San Francisco gold dollars.

I like this sort of specialization because it gives a collector a much more narrow focus or what I would call a "micro focus" as opposed to a "macro focus." If you are assembling a gold dollar set you have around 80 to 90 coins that you ultimately need to purchase and learn about. This is a lot easier than being an indiscriminate buyer of U.S. gold coins with a pool of hundreds--or even thousands--of issues to become familiar with.

A more narrow focus involving gold dollars would be the San Francisco set I mentioned above. There are only six coins to learn about and it wouldn't take much to be accomplished in this area. But I think most collectors aspire to more than being "Mr. San Francisco gold dollar."

Another way to specialize is to collect by die variety. This is a great collecting strategy for certain coins like bust half dollars or large cents but it doesn't apply all that well to U.S. gold.

In my opinion, the ideal way to collect is to have a #1 set and then a secondary set to keep you busy when you can't find coins for set #1. As an example, you could specialize in collecting early half eagles by date and have a secondary collection that is focused on Dahlonega half eagles in perfect, original EF grades.

Becoming a good numismatist is all about knowledge and by not biting off more than you can realistically chew. you stand a chance to be on equal footing with other collectors in your area of specialization. You might not aspire to write the standard reference book on San Francisco gold dollars but wouldn't it be nice to be able to make purchases in this area of the market knowing that you were clued-in about the rarity, price history, appearance and minting history of each issue?

Deciding What to Collect

During the last few weeks I've had a similar conversation with a few new and more experienced collectors: what should I be collecting? I've found all the conversations that I have had with these collectors to have a similar unifying theme; at least from the standpoint of the collectors. My observation is that everyone takes the "what should I collect?" question a bit too seriously and expects there to be a rigorous set of rules that they have to follow. I personally think they are forgetting the fact that coin collecting is more about having fun than following a set of rules. If you are reading this on my website, you've probably already decided that you want to collect United States gold coins. Taking this a step further, if you are a brand-new collector (or you are at least new to gold coins) how do you decide specifically what to focus on? Or do you need to focus on anything at all?

There are a number of considerations that come into play. The most obvious of these is your budget. If you are currently comfortable spending $2,500 on a single coin than you should probably recognize the fact that you are eventually going to be comfortable at a higher level; let's say $5,000 or so per coin. If this is your comfortable level, then you have to be practical when choosing an area to collect. Early gold, as an example, will not work for you as very few pieces are available in the $5,000 range. Look at auction records, dealer websites and pricing guides to help select an area that you can afford.

Do you have to put together a set? That really depends on an individual collector's perspective. A few decades ago, nearly everyone collected specific sets by date. But coins were a lot cheaper back then so it was not impractical to decide to assemble a full date set of Dahlonega quarter eagles or San Francisco eagles in high grades. Today, rare coins are expensive and for many collectors it isn't practical to assemble a date set. Or, they may have to settle for very low quality examples of the rarities within their selected set.

But where is it written that you absolutely have to complete a set? Let's say you really like Dahlonega quarter eagles and you've been able to purchase six or seven really nice About Uncirculated common dates over the years. As you draw closer to completion you come to the realization that you are never going to be able to afford the key issues such as the 1855-D or the 1856-D. I look at sets of coins on a regular basis and, to be honest, I'd be a lot more impressed with a partial set of ten Dahlonega quarter eagles that contained very nice coins than a complete set of twenty that had a damaged 1856-D, an 1855-D that was harshly cleaned and a few other pieces that stuck out like a sore thumb.

Something that I recommend to certain collectors is what I call the "best available coin" strategy. This requires thinking outside the proverbial box a little bit but it makes sense to me. Let's say that you've decided on some basic parameters on all the coins you'll be buying. You want all the coins to be gold, you want them all to be dated prior to 1880, you want them all to have original mintage figures below 25,000, you want them all to have PCGS populations of less than 150 in all grades and you want them to grade at least AU50. If you've established these parameters, why limit yourself to coins from a specific mint or denomination? If you see a coin that is choice and original and which fits most (or all) of your strategic parameters, buy it; it doesn't matter if its a San Francisco quarter eagles, a Philadelphia half eagle or a Carson City eagle.

Earlier, I mentioned personal preference and I think this is an extremely important factor in deciding what you want to collect. Buy what appeals to you, not because a dealer is touting a coin or because there is a promotion trying to convince you a series is undervalued. Some people don't like small coins. If you are in this camp, that's fine; stay away from gold dollars and quarter eagles. Some people like big, hefty coins; if this describes you than you are going to naturally be attracted to eagles and double eagles.

There are other factors that relate to personal preference. You may or may not be attracted to a coin because of its design. I personally do not find the Liberty Head gold series to be dramatically attractive from an artistic point of view so I do not derive aesthetic satisfaction from specializing in these coins. Gold coins struck between 1795 and 1900 appeal to me more as a result of their historic significance than their beauty.

As someone who buys millions of dollars of coins every year, I find myself more and more value-conscious all the time. Many coins strike me as poor value. Why? Generally because, in my opinion, I feel that they do not meet the supply/demand ratio that makes sense to me. I find it hard to rationalize getting excited about a $10,000 coin that I can find at any coin show (sorry, Mr. 1911-D quarter eagle...). I like coins that I can only find from time to time and I like coins that have two or three or four eager collectors waiting for each one that comes available.

Popularity is an important factor in deciding what to collect. I'm not saying that you should collect generic St. Gaudens double eagles in MS63 because they have a very high level of demand. But I'm saying that you should be careful about focusing on a seemingly undervalued issue that is a good deal mainly because no one cares. Yes, you might be a brilliant contrarian and you might have stumbled on the next Three Dollar gold piece series circa 2003-2004 (an undervalued series on the cusp of dramatically expanding in popularity) But you may have also found an area that is a marginal deal because no one is likely to care any time soon. Ask a trusted dealer or collector friend what he thinks about your decision(s).

The most important message that I'd like you to take from this is that collecting should be fun and that you should collect in order to satisfy yourself and not others. Sure, I'd like every upscale collector in the United States to collect Charlotte and Dahlonega gold. I'd get to be King of the Market for a few years, retire and start work on that great screenplay I've been kicking around for years. But I respect the fact that C+D gold isn't for everyone. Find what you love, learn as much as you can about it and have fun. After that, it's all easy...